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Illegal Outposts in the Hills of Bali

Many Ubud Villas and Hotel Built and Operated without Necessary Permits

(6/14/2013) The Jakarta Post reports that the village of Ubud in Bali’s Gianyar regency may be becoming a victim of its own charms.

In a rush to own their own corner of Ubud, investors are constructing luxury villas that they rent out as tourist accommodation, often doing so without the needed construction and operating permits.

According to the head of the Ubudi Hotels Association, Heri Sumawan, most of the newly built commercial villas in Ubud are constructed with permits for applicable only for private residences, with some structures even using forged permits. Other villas are being built with no building permit at all.

Sumawan estimates some 300 new villas in Ubud without any permit or license, adding, “These are just rough numbers, there are so many more.” He says the illegally built and unlicensed commercial villas are affecting the local hotel industry in Ubud and causing a loss in tax revenues to the regency.

Local hoteliers in Ubud are concerned and becoming increasingly irritated at the presence of “unfair competition” as hotels report decreases in average occupancy rates of between 20 and 40 percent. Hoteliers blame the downturn in business on world economic conditions and the dramatic price discounting practiced by unregistered and illegal villas and hotels in Ubud.

Official data from the Gianyar regency reveal 911 accommodation providers comprised of 27 star-rated hotels, 353 hostels, and 398 villas and rented houses. According to The Jakarta Post, 881 of the hotels and villas are unlicensed.